Category : Startup community

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Startup community

The benefits of being a Sole Founder in a startup

A lot of VCs talk about betting on a team. Being a sole founder is seen as a problem. VCs want to see 3-4 founders, each with a different skill-set coming together to build a terrific startup.

Many VCs want an IIM and IIT grads in the team to fund your business. The sales person is expected to make a great CEO while the tech person is made CTO. There have even been examples of startups with 10+ co-founders (remember Housing.com?) being seen as ideal for funding from a VC standpoint.

But no all the startups will have IIMs & IITians in their team and also not all the startup founded by IIMs & IITians are fundbale and scalable.

But there are some advantages you will enjoy if you are a sole

1. No risk of founder squabbles: One of the biggest reasons for startups failing is infighting between founders. Not having any co-founders means no worries about fighting and destroying the startup

2. Dilution is not a problem: If there are five co-founders, then each one ends up with an average of 20% of the company. After two rounds of funding, suddenly you find each member of the founding team with a pretty tiny ownership. This leads to the risk of key players not having any incentive ..

3 Flexibility to attract the right talent: The five people who started a company may have been ideal at that initial idea stage. But as the startup grows, having all these founders at the top, with some of them not being able to perform, will limit the ability of the company to attract better suited talent

4. Clarity/speed in decision making: What kills a startup faster than anything else is slow and poor decision making. Having a sole founder, who is free to take advice from his mentors and his board, makes it possible for decisions to be made efficiently. Multiple founders having a say in decisions slows things down when startups are all about speed

5. Less office politics: Great talent loves to work in startups because they are supposed to have less office politics than large companies. ..

Though the popular wisdom wants you to believe that having multiple co-founders will increase the chances of a startup succeeding, the hard data actually shows just the opposite. An analysis of more than 7k companies in Crunch Base API showed that sole founders have a much higher success rate than teams with multiple founders.

So ignore the VCs and just start a company all on your own. You'll be fine!